Rising interest rates and inflation continued to limit merger & acquisition activity in the first half of 2023. But based on current forecasts, the insurance M&A market may begin to recover later this year or early in 2024. For agencies looking for new investors, partners or a buyer, buckling down on your data will be key to positioning your business for the best possible outcome.

Agency owners know if they are making a profit, but digging into the data behind your bottom line provides the holistic picture potential suitors are looking for. Where are you making money (or not)? How are you spending, and what's the ROI? Why and when are clients converting? Where are your growth opportunities?

Uncovering the “why" behind your agency's success—along with the details to back it up—matters more than ever in the current M&A climate. That's where your agency's technology takes center stage.

In your day-to-day operations, your customer relationship management (CRM) tool is the engine that helps you stay on top of your client journey. It also offers a goldmine of data about the state of your business, such as your sales rate and pipeline, most profitable lines of business, where prospects are converting, average sales cycles, renewal rates and much more.

But the real power comes with having a CRM that integrates with your agency management system (AMS). For most agencies, their AMS is the tech that's powering their most essential functions. And perhaps most importantly, the AMS is the window into an agency's revenue and profitability.

Ultimately, the combination of your CRM and AMS provides the ability to understand and show how your agency is doing. These tools hold the data you need to tell the story about your business that investors are looking for.

It's one thing to know how you've been performing historically, but investors and buyers also want to know the long-term potential of their investment. Think of your AMS and CRM as the tools to level-set where you are and where you've been. That's your data set.

Machine learning and artificial intelligence (AI) are now accessible to independent agencies of all sizes, and they can integrate with your AMS and CRM to process data to uncover trends and opportunities for growth.

These tools can also act like a crystal ball to model where you are going in the future. They can predict things like client retention, the best prospects for cross-selling and the likely outcomes of adding a line of business. With data-backed predictions, you can create a crystal-clear picture of the value of your agency.

Numbers and data are essential to tell your agency's story—but only if they are accurate. The numbers that come out of your management systems are only as good as the data you put into them. Whether a merger is on your immediate horizon or part of your long-term business strategy, now is the time to shore up—or create—a solid data governance plan for your entire agency.

That plan should include standardizing workflows to ensure data consistency and accuracy, automating processes when possible, and leveraging application programing interfaces (APIs) and open platforms to reduce redundant data entry. Not only will this leave you better prepared, but your agency will reap the benefits of data governance for increased success in the meantime.

Dana Pasquali is vice president of product management at Vertafore.